Election Impact: States Now Face a Tight Deadline for Implementing Health Insurance Exchanges—Will the IT Be Ready?

Yes, because the other thing that happens in 2014 is that there’s a massive expansion of Medicaid eligibility that goes into effect; and there’s the new and very significant requirement for everyone to have health insurance. And that really is good news for providers, because your uncompensated care should decline precipitously. But the patients who show up will often have longstanding health problems, and they will also be people who have not interacted much with the health insurance world. And don’t expect right out of the gate that these people will be able to use self-service mechanisms. So you’ll see lots of pent-up demand, and not very sophisticated users. So in terms specifically of the exchanges, if there’s a delay, it will have to be a full-year delay, because of the way these programs work. Medicare and Medicaid, like private health insurers, work on calendar year schedules.

And whenever you have an initiative that takes more than one cycle to complete, it’s code for “never.” And this is magnificent and national in scope: if you think about it, Medicare came up in one year, in 1965. And they knew who the beneficiaries were, because they were in the Social Security system. It’s a comparison that people don’t make very often, but it’s a relevant comparison. We were able to bring up the Medicare program in 12-15 months, but the world was a lot simpler then. Back then, we knew who everyone was; they were already effectively enrolled. But that’s not true of this population.

There are some implications for providers here. First, the reality is that payment rates are going down for hospitals; and anything that expands eligibility for some program is probably good for hospitals, especially because the uncompensated care problem was becoming unsustainable. On another level, there’s a question here for hospitals as purchasers of care for their own employees. Because there’s a movement among employers to do what they did with pensions, to get out of defined benefit programs and get into defined contribution programs, and that will now happen in healthcare. And a lot of hospitals may release their employees into these exchanges, or move to a defined a contribution plan, and having exchanges where their employees can shop for insurance options, will be a huge benefit. I don’t see hospitals doing this wholesale, and here in the West where I am, the labor organizations won’t let them do it; but health employers will have a harder time in the new environment coping with their benefit costs.